Saturday, December 17, 2016

Nepal getting new software to track old Indian notes

The central bank is getting new software to facilitate the exchange of banned Indian currency (IC) Rs 500 and Rs 1000 notes in the country.
The software will also make it impossible for non-Nepalis to exchange demonitised Indian notes, central bank deputy governor Chintamani Shiwakoti said speaking to mediapersons in Biratnagar today.
"We have already sent a proposal to the Reserve Bank of India (RBI) on the system that will be in place to exchange demonistised notes,” he said adding that an individual will only get to exchange Rs 25,000 worth of Indian currency (IC). "If we find that anyone has exchanged more than Rs 25,000, we will seize the excess amount."
In accord to the new template, a Nepali citizen wanting to exchange money has to fill up a form, submit a copy of Nepali citizen and other personal details, which will be uploaded in the software. The software will bar any user coming to exchange money for the second time and has exceeded the limit.
Nepal Rastra Bank – the central bank – will provide a form for anyone, who wishes to exchange IC and on the form the person needs to provide his/her citizenship number and phone number, according to Shiwakoti.
The central bank is now waiting for RBI nod to use this software. As soon as the central bank gets the permission, it will distribute the software across its branches in Nepal.
IC worth over Rs 3.36 billion Nepali currency is believed to be in Nepal, according to the unofficial figure. Likewise, around Rs 2.52 billion of worth of IC in Rs 500 and 1,000 denominations is believed to be in the banking sector and around Rs 810 million with travel agencies and other businesses.
The Indian government – in its bid to fight against black money – is less concerned about the implications of demonitisation on the neighbouring countries, according to central bank officials. "This is a secondary issue for them as their focus is on mitigating the problems brought about by the announcement," the official added.
The demonetisation of Indian notes has affected the banking system of Nepal. The cemntral bank has permitted very small amount of the IC 100 rupee notes to people, who want to visit India.
The central bank has also been witnessing long queues since the demonetisation of notes in India.
Prime Minister Pushpa Kamal Dahal and his Indian counterpart Narendra Modi have also discussed the issue over the phone. Likewise, finance minister Krishna Bahadur Mahara and his Indian counterpart Arun Jaitley also held talks on the issue over phone. India has assured it will provide exchange facility but it has not provided any details.
Meanwhile, the Reserve Bank of India (RBI) has told the central bank that it will not be providing India notes till April of next year. Nepal buys Indian Currency (IC) paying dollar as the country imports most of the merchandise from India in Indian Currency. Apart from, the payment of imports bill, Nepalis going to India for education, pilgrimage, trading or for treatment, also need IC in regular basis. But they are facing hard times due to Indian government's move to ban IRs 500 and IRs 1,000 banknotes.
On November 8, Indian Prime Minister Modi, in an unscheduled live televised address at 20:15, declared that use of all IRs 500 and IRs 1,000 banknotes of the Mahatma Gandhi Series would be invalid from midnight of the same day and announced the issuance of new Rs 500 and Rs 2,000 bank notes of the Mahatma Gandhi New Series in exchange for the old banknotes.
Though, the Indian government claimed that demonetisation was an effort to stop counterfeiting of the current banknotes allegedly used for funding terrorism, as well as a crack down on black money in the country, it has hit the general public in the rural areas more. The move was also described by the Indian government as an effort to reduce corruption, the use of drugs, and smuggling.
The Indian government’s deadline to exchange the demonitised notes elapses on December 30. Chances are that the Indian government would allow Nepalis to deposit their notes in their bank accounts in Nepal after bearers present their documents to prove the source of the currency. But the window period will be short.